December Chicago wheat was trading 6 cents lower near 7:30 am CST and losses were similar in the KC but Minneapolis gained on KC. The November Matif Milling wheat contract is trading 1.00 Euro lower this morning as the market looks ahead to the results of last night's Egypt wheat tender. The wheat market was under pressure in early trade but the additional downside was seen after European markets opened. Poor service PMI data out of France, Germany, and Italy has European markets and the Euro lower this morning. The Eurozone PMI was pegged at 46.1 in September vs. 46.3 in August. The US Dollar is higher this morning which is adding to the negative tilt for the grain markets.

December Chicago wheat traded lower overnight, saw its 3rd consecutive day of losses, and has nearly retraced last Friday's entire move higher. Volume has deteriorated from last Friday with only 62,930 contracts trading yesterday and open interest declined by 164 contracts. Chicago wheat is approaching the low end of its 10 week trading range and the December contract continues to narrow its premium to December corn. The spread was trading $1.46 premium in favor of wheat on the 28th of September and this morning the spread is near $1.10 premium.

Romanian wheat was reportedly the cheapest offer on the recent Iraq tender and rumors that Russia bid on the business added pressure to Chicago wheat prices. It is being reported that the Russian offer was not aggressive and one of the most expensive quotes while Australia surprised traders with an aggressive bid for the business. Results of the tender should be seen later this week. Egypt tendered for an unspecified volume overnight and France will likely be the beneficiary of the business. Additional business may be done by Ukraine, Romania, or Germany while the US will likely fall short. The shipment period for wheat is December 11-20 which means this could be the last Egypt tender for 2012 delivery. The results of the tender will be released later this afternoon.

Growing conditions remain mixed for the western plains but certainly more rainfall is needed to have successful germination of the Hard Red Winter wheat crop. Better rainfall in September has improved soil moisture deficits but the main growing regions remain historically dry. As of September 30th, short to very short topsoil conditions over 90% in South Dakota and Nebraska vs. a 5 year average of 37-38%. Kansas is now 68% short to very short vs. a 5 year average of 39%. Surprisingly, Oklahoma is 56% short to very short vs. a 5 year average of 60%. Some central and southern parts of the HRW wheat belt will benefit from rain next week. Australia continues to trend drier than normal with no significant rainfall scheduled for this week. Liquidation continues in Chicago wheat as demand remains slow and conditions improve in the eastern and western wheat growing areas. Improved rainfall in northern KS, Nebraska, and South Dakota is needed. World wheat prices continue to escalate as demand grows and many expect world wheat production to decline in next week's USDA report. However, the US continues to be uncompetitive in the Middle East and exports are well behind the USDA estimate.


View All Market Commentary

*Disclaimer: The information in the Market Commentaries was obtained from sources believed to be reliable, but we do not guarantee its accuracy. Neither the information nor any opinion expressed therein constitutes a solicitation of the purchase or sale of any futures or options contracts.

Copyright CME Group All rights reserved.